Playing Around

Mobile phones have the potential to drag video gaming into the mass market. However, while many mobile phone users welcome the addition of embedded games on their device, not so many are prepared to spend money to download new titles. Christopher Reynolds speaks to a variety of mobile game experts to find out what the inhibitors to the uptake of mobile games are and how the industry plans to overcome them.

|~|webjaakko_kaidesoja.jpg|~|Nokia’s Jaakko Kaidesoja believes the online distribution portal for mobile games needs to be enhanced considerably to make mobile gaming a viable mass-market product. This is starting to happen.|~|A recent report by Juniper Research estimates annual revenues generated by mobile games to have surpassed the US$3 billion mark by the end of 2006, and forecasts an increase to over US$17.5 billion by the end of 2011. Cumulative revenues for the next four years are predicted to reach US$56 billion, with Asia Pacific contributing 38% to that figure, Europe 31%, North America 22% and the remaining 9% divided between South America and other markets. Game developers, mobile phone manufacturers, and service providers are eyeing up the vast potential held by an ostensible video game device, which, in theory, has a user base that far outstrips that of the three best established game platforms combined. According to iPlay, a mobile game publisher and developer, 300 million video game consoles and portable dedicated gaming platforms were sold in the last 25 years. However, 300 million mobile phones, capable of supporting mobile games, were purchased in 4Q06 alone. Mobile game experts do not have to worry about how to convince mobile phone users to play games on their handsets, that was ably facilitated when game developers and device manufacturers cooperated to equip mobile phones with embedded games, such as the hugely popular ‘Snake’ title. However there is a difference between ‘willing to play’ and ‘willing to pay’ and Gunner Larsen, director of Real Networks’ mobile game division, believes what developers, publishers and operators alike are avidly searching for right now is a strategy that can convince the mass market to pay for mobile video games while minimising the effects of churn. “Some studies show that there are 84% of us (in Europe) who use mobile phones and also, depending on who you talk to, there is something like 40% of those people playing mobile games. However, most of those people are playing embedded games. Very few people actually purchase them,” suggests Larsen. “What we have to do as an industry is to make these guys pay money. First of all we have to solve the churn issue. There are a large proportion of users who buy a game and then don’t buy another one. So for every 100 people only four come back, and that is a big problem that we need to address, and so I think we have to look at the retail experience,” Larsen says. One of the main stumbling blocks to mass-market uptake of mobile games is the accessibility of mobile game distribution channels. The online portal retail model that proliferates has lately come under a great deal of fire. Nokia’s Jaakko Kaidesoja, director of play new multimedia, highlights the confusion consumers face when trying to ascertain if a certain game will function on their phone model, what the overall cost of downloading the game will be in the face of operator delineated data charges, and the lack of information web portals provide users on a game’s functionality. “The consumer experience is falling short big time. If you want to go out and find a good game and make sure it runs on your device, where do you start? What is the portal you connect to? How do you know if it runs on your device? How can you test the game before you buy? One of the big reasons why people are not buying mobile games is because it is so bloody difficult,” says Kaidesoja. Javier Ferreira, vice president of EA games Europe, agrees that operators need to adopt high speed retailing practices and that developers and publishers have to enable operators to redesign the retail experience via the offering of ‘try before you buy’ demos and game bundle opportunities. However the main factor inhibiting the enhancement of the consumer experience, according to Ferreira, is per minute billing on mobile internet access. “We really need to think about how users can access virtual shops in an easy way, so we bridge that gap between ‘willing to pay’ and ‘willing to play’, and that is going to be driven mainly by the operators,” states Ferreira. “In the internet world you did not see the explosion until you had broadband charged at a flat rate, so customers need to be able to browse portals on their phone without having to worry about the cost, that is what we need to see,” he adds. Enhancing the consumer experience is one thing but in order to allow mobile gaming to tap into the mass market potential, which so often eludes video game publishers, pricing needs careful attention. The video game industry generated US$35 billion in 2005 and that figure is expected to grow to US$65 billion in 2011, according to research firm ABI. However, the industry still addresses a niche market, albeit a very large one, where the overwhelming majority of customers are male and below the age 29. Game developers and publishers have been able to charge consumers a premium price for video games since the home console market was created, and consumers have been willing to pay, providing the games meet the ever growing standards and high production values development studios aim for. However, Gonzague de Vallois vice president, publishing, of games developer and publisher Gameloft, is adamant that mobile games have to break with tradition and embrace a variety of price frameworks in order to compete against other mobile-centric products that vie for mass market consumer income. ||**|||~|webvideogames.jpg|~|The video game industry currently generates more revenue than the film industry, with three major players – Microsoft, Nintendo and Sony – vying for control over the lucrative console hardware market. However, this success has not flowed over to the mobile handset space.|~|“To promote ourselves in the mass market we need mass market pricing. So we think that Euros 7 (US$9.21) for a simple 2D game, plus what you pay in terms of online tariffs, is reducing the market to a niche of fans,” says de Vallois. “Today we are leaning on a few hundred thousands fans, or a few one-time-per-year buyers, who pay for a game then feel they have paid too much and don’t buy any more. We have to keep in mind that we are competing with mobile video, ringtones and mp3 and there are people who have a limited budget, so if we really want to make mobile gaming mass market then we really need to be aggressive on the pricing,” he adds. However, David Gosen, CEO of games developer and publisher iPlay, points out that while pricing has to be equipped for mass market, it also needs to be sophisticated enough to deal with premium standards as well as low value entry point products, as the shift toward 3D enabling technology has steadily increased development costs of mobile games. If consumer pricing remains the same, and carriers set prices, then developers are going to struggle to make significant returns. “So what we need to see is 2D games having a premium standard and value entry price point, as we move to 3D and more potentially immersive games then that should be reflected in the price,” asserts Gosen. “What we also need to bear in mind is that subscription based pricing can reduce the per-unit cost of the game but can lead to greater volume uptake and greater longevity of that particular title. So you have to really think about your business model,” he adds. In markets where flat rate data charges and subscription services exist, mobile game uptake is greatly increased. The largest mobile gaming market is in Asia Pacific, where Japan and South Korea in particular are leading the way. Mobile games are already the most popular form of downloadable mobile content in Japan and from 2006 to 2011, the Asia Pacific region is predicted to generate 38% of global mobile game revenues, according to Juniper Research; during that same period game downloads for the Asia Pacific market are forecast to contribute over 60% of global downloads. “In Korea and Japan there is more flat data charging and subscription data charging. People can join games clubs and download five or ten games per month on a subscription basis. Europe and North America started with a classic download model, which you pay for a game individually and you are probably paying data charges as you download it, so basically mobile games work out a lot cheaper in Japan and Korea,” explains Bruce Gibson, senior consultant of Juniper Research. While price points and retail experience are two facets that currently provoke a great deal of debate, there is a third issue concerning mobile phone games that has cast a shadow over the industry since it began: the schism between ‘hardcore’ and ‘casual’ gamer demographics. The definitions are by no means concrete but ‘hardcore’ gamers are usually distinguished by their willingness to buy current generation dedicated gaming platforms, in order to play games that can take anything between 10 to 50 hours to complete, whereas casual gamers are those who are not willing to spend a great deal of time - or income - on console experiences but enjoy playing simple games, in order to eliminate small periods of boredom, as Real Networks’ Larsen explains. “A casual game is a simple and intuitive game, there are not a lot of rules, it is usually non violent and is ultimately relaxing. Research has shown that our customers want to relax when they are playing games, in contrast to many console games that attempt to exhilarate, tax or frighten players. Why will casual games take mobile gaming into the mainstream? Because they are perfect for those moments of micro-boredom,” Larsen suggests. An apt example of the divide that exists between the ‘hardcore’ and ‘casual’ market is the N-Gage, Nokia’s hybrid gaming platform. Released in 2003 the device attempted to lure handheld gamers away from the traditional Nintendo staple of Gameboy incarnations, with the premise of offering the required ergonomics and processing power of a dedicated handheld gaming device with the added functionality of a phone, mp3 player, and internet capability. The device received a frosty reception from the video games industry even before it was made commercially available. N-Gage sales stood at just over 2.5 million in September 2005, less than half of Nokia’s end-of-2004 target of 6 million sold units. “I think we went too much into trying to market the N-Gage toward the hardcore gamer. There is a great difference between the mobile gaming market and the handheld console market,” says Nokia’s Kaidesoja. “What you can provide with the DS and PSP in terms of gaming ergonomics we just cannot meet with a mobile handset. I think the positioning of the N-Gage was too much toward hardcore gamers and too much against PSP and DS, whereas now we are taking a step back, we are providing more casual games and trying to grow the pie in the mobile gaming market, where we are strong, and taking the mass market into mobile games,” he adds. While the high price and scarcity of N-Gage games were big contributors to its poor sales figures, the rejection and ridicule the device received from large parts of the video game community, industry, and press - before the system was even released - impacted heavily on the platform’s integrity in a market in which console brands engender a great deal of loyalty from consumers. The attitude of the ‘hardcore’ market toward the N-Gage has undoubtedly played a significant role in turning the heads of major mobile game developers and publishers away from the ‘hardcore’ gamer and toward ‘casual’, mass market, ventures. Ludovic Blondel, Gameloft’s sales manager, believes that the population of video game players amongst the ‘casual’ mobile game community has already diminished considerably and ‘hardcore’ gamers will begin to find experiences in the mobile arena becoming less familiar to what they are used to on dedicated platforms. “When it comes to ‘casual’ games you need to look at the figures. Gameloft is connected to one of the largest video game publishers in the world - Ubisoft. The Ubisoft licences that we develop for mobile games, which are very well known in the ‘hardcore’ console market, only account for 18% of our revenues, which means that we have 82% of our clients who are not all that interested in video games but very interested in mobile games,” explains Blondel. “So it means that you have to be very careful about the definition of mobile games right now, as they are not necessarily video games any more." Mass market success is thus largely in the hands of mobile gamers. ||**||